U.S. v. David Kay and Douglas Murphy, C.R. No. H-01-914 (S.D.Texas)

The Securities and Exchange Commission announced that on June 29, the Honorable David H. Hittner, U.S. District Court Judge for the Southern District of Texas, sentenced Douglas Murphy and David Kay, two former officers of American Rice, Inc., to prison for violating the Foreign Corrupt Practices Act. Murphy, a resident of Texas, was sentenced to 63 months in prison followed by three years of supervised release. Kay, also a resident of Texas, was sentenced to 37 months in prison followed by two years of supervised release. The defendants were released on bond pending appeal.

Previously, on October 6, 2004, a federal jury in Houston, Texas, found Murphy and Kay guilty of authorizing over $500,000 in bribes to Haitian customs officials during 1998 and 1999 to illegally reduce American Rice's import taxes in violation of the Foreign Corrupt Practices Act. The jury also found defendant Murphy guilty of obstruction of justice in connection with a parallel civil investigation of the bribery payments by the Securities and Exchange Commission. Murphy was American Rice's president at the time of the violations. Kay was an American Rice vice president of operations and reported to Murphy. This criminal action, brought by the Department of Justice, arose out of a joint investigation with the Securities and Exchange Commission.

The Securities and Exchange Commission filed a civil action against Murphy and Kay in the Southern District of Texas. The Commission's complaint alleges, among other things, that Murphy and Kay violated the civil provisions of the Foreign Corrupt Practices Act. The Commission's civil action has been stayed pending completion of the criminal proceedings.